Monthly Archives: March 2017

business plan

A business plan is a document demonstrating the feasibility of a prospective new business and providing a roadmap for its first several years of operation.

Business plans are an important part of creating new businesses, whether as a startup or an offshoot of an existing business. Business plans for startups are often shared with funding agencies, potential investors and venture capitalists to obtain the necessary funding.

Although the specifics may vary, here are the typical components of a business plan for a new business:

The executive summary is a nutshell version of the entire plan, briefly covering the essentials.

The business description describes the proposed new endeavor, explains its purpose and its target market.

The plan’s market analysis section describes the industry and the market environment of the proposed business, including a profile of the competition.

The organizational and managerial section explains how you envision the structure of your business, what types of positions and departments it will encompass.

The products (or services) section details what you’re offering. This section should include a full description of the products you’ll sell and your plan for product lifecycle management (PLM ).

The funding request will differ according to what type of information is required by the funding party.

The financial projection covers the expected performance and milestones over the first years of operation, usually five years. For an existing business, historical financial data should be included.

An appendix can include useful information that doesn’t belong in any of the other sections.

A business plan is similar to a business model. However, the latter is a representation of how an existing business works, rather than how a prospective business can work.

This was last updated in December 2013

Contributor(s): Ivy Wigmore

Related Terms

Definitions

– Risk management is a company’s process for identifying and controlling threats to its assets, including proprietary corporate data, customers’ PII and intellectual property. (SearchCompliance.com )

– Rebranding is an update of the materials and presentation used to represent a business. A company may rebrand to appear more modern or to distance itself from past issues, among other possibilities. (WhatIs.com )

– A/B testing is a statistical method used to assess proposed changes to a product or service. (SearchBusinessAnalytics.com )

Glossaries

– Terms related to business, including definitions about project management and words and phrases about human resources, finance and vertical industries.

– This WhatIs.com glossary contains terms related to Internet applications, including definitions about Software as a Service (SaaS) delivery models and words and phrases about web sites, e-commerce.

Dig Deeper

What Is Business Networking, Anyway?

Founder and Chief Visionary Officer of BNI

Business networking is leveraging your business and personal connections to bring you a regular supply of new business. The concept sounds simple, doesn t it? Don t let that fool you, though. Because it involves relationship building, it can be a deceptively complex process.

Think about it. How many people do you know? How many of these people truly understand what you do? How many of these folks have directed prospects to you as referrals? And how many of those referrals have actually turned into business?

Business networking is much more than showing up at networking functions, shaking a lot of hands and collecting a bunch of cards.

For example, imagine two people attending an event, sizing it up and drawing an imaginary line down the middle. They separate, each taking half the room. At the end of the event, they meet again to see who s collected the most business cards.

Have you met these people? Sure you have. We all have. What did they accomplish? They collected a lot of cards that will end up on a shelf, in a drawer, in the trash, or–worse yet–scanned into a computer so they can spam everyone they just met. Why? What does a business card represent? It s a piece of paper, with ink and images on it. No relationship has been formed. This networking strategy, by itself, isn t an effective use of time, money or energy.

Some people get frustrated with networking because they seem to be making as much progress as a rear-wheel-drive truck on an icy hill: one foot forward, 10 feet back–getting nowhere fast.

Networking for business growth must be strategic and focused. Not everyone you meet can help move your business forward–but everything you do can be driven by the intention to grow your business. You have total control over whom you meet, where you meet them and how you develop and leverage relationships for mutual benefit. You have total control over whether you enter into the unique 29 percent of the population that is separated by six degrees (read The 29% Solution to learn more), whether you stay there, or whether you never get there at all.

Networking your business means you have to be proactive. The core of networking is doing something specific each week that is focused on networking for business growth. Make a plan, focus and be consistent. When you understand exactly what business networking is and step up to the challenge, you ll find avenues of opportunity that you may have otherwise never discovered, and you will be making an invaluable investment in the steady growth of your business.

Business Model

What is a ‘Business Model’

A business model is the way in which a company generates revenue and makes a profit from company operations. Analysts use the metric gross profit as a way to compare the efficiency and effectiveness of a firm’s business model. Gross profit is calculated by subtracting the cost of goods sold from revenues .

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BREAKING DOWN ‘Business Model’

During the dotcom boom analysts went in search of net income. The internet is a disruptive technology with the ability to revolutionize certain industries, but where was the cash flow? When analysts couldn’t find the cash flow, they settled for the business model to legitimize the industry. Instead of looking at net income, calculated as gross profit minus operating expenses, analysts concentrated on gross profit. If the gross profit was high enough, analysts theorized, the cash flow would come.

Business Model Components

The two primary levers of a company’s business model are pricing and costs. A company can raise prices and it can find inventory at reduced costs. Both actions increase gross profit. Gross profit is often considered the first line of profitability because it only considers costs, not expenses. It focuses strictly on the way in which a company does business, not the efficiency of management. Investors that focus on business models are leaving room for an ineffective management team. They believe the best business models can run themselves.

Comparing Business Models

As an example, assume there are two companies and both companies rent movies. Prior to the internet, both companies made $5 million in revenues and the total cost of inventory sold was $4 million. Gross profit is calculated as $5 million minus $4 million, or $1 million. Gross profit margin is calculated as gross profit divided by revenues, or 20%.

After the advent of the internet, company B decides to offer movies online instead of renting or selling a physical copy. This change disrupts the business model in a positive way. The licensing fees do not change, but the cost of holding inventory is down considerably. In fact, the change reduces storage and distribution costs by $2 million. The new gross profit for the company is $5 million minus $2 million, or $3 million. The new gross profit margin is 60%, which is much higher than 20%.

Company B isn’t making more in sales, but it figured out a way to revolutionize its business model, which greatly reduces costs. Managers at company B have an additional 40% more in margin to play with than managers at company A. Managers at company A have little room for error.

5 Top Picks for Small Business Cloud-Based Accounting

Small business owners don’t need to purchase expensive business accounting software programs or spend hours lost in complicated reports. Any accounting software will provide the basic applications for accounting tasks, but packages designed for small office owners and manager tend to simplify the process and provide essentials that include a general ledger, the capability to create detailed invoices or view business inventory and purchase history.

Cloud accounting services—software stored and accessed online—is an attractive option for small business owners. When using cloud accounting software, IT tasks such as version upgrades and data backup are managed by the application vendor.

In looking at small business accounting options, CIO.com specifically looked for applications designed to meet both the budget and the needs of a typical small office or small business. We chose five cloud accounting service options available cost $20 or less per month and are easy to use—even for small business owners with little or no experience with accounting tasks.

FreshBooks: Guided Help Boxes Make Small Business Accounting Easy

FreshBooks is a simple cloud accounting application designed to help small business owners to get organized and get paid. Since it’s a hosted accounting service, you can access your business data everywhere—on a mobile device or desktop computer—and your data is secure and backed up for you.

Small business owners will appreciate FreshBooks’ guided step-by-step wizard and help boxes that appear each time you perform a new task, such as create a new invoice or add a new client to your records. As you familiarize yourself with FreshBooks, you can turn these helpful tips off.

FreshBooks is free for 30 days, with the basic business plan starting at $19.95 per month. There’s also an add-on store where you’ll find third-party applications to add new features and functionality to FreshBooks. Some apps are free—such as the Constant Contact Export and the FreshBooks Connector for Sage Peachtree (now known as Sage 50 )—while others are available on a monthly subscription basis.

QuickBooks Online Simple Start: A Good Value for Small Businesses

Today, QuickBooks is synonymous with small business accounting. While a number of standalone and hosted versions are available, QuickBooks Online Simple Start is a good value for small office accounting needs.

The online version is $12.95 per month and includes a 30-day free trial. This software makes it easy to create invoices, track sales and expenses, download banking transactions and access business data on any mobile device. Other handy features in Online Simple Start include check printing and exporting data to Microsoft Excel.

If you need a little more functionality than QuickBooks Online provides, there are a few add-ons. These include the “Payroll Bundle” to pay your employees and a merchant service app to accept debit, credit cards and checks in QuickBooks Online.

Kashoo: Professional Invoices, Simple Dashboards

Kashoo is another cloud accounting service worth a look. It’s a simple accounting app for small businesses offering anytime access from an iPad or Web browser.

Features for the small business include connecting to online bank accounts and credit cards, professional invoices, simple dashboards and options to categorize income and expenses specifically for tax reporting. In addition, you can easily share your business data with your accountant online. Finally, Kashoo boasts secure, double-entry accounting for bank reconciliation and financial statements.

Kashoo is priced at $16 per month. A free version is available; however, users are limited to 20 transactions each month.

Outright: Online Accounting for Ecommerce Businesses

Outright is an easy-to-use cloud accounting system that lets small business ecommerce owners organize and keep track of sales and finances in one place. At a glance, you can see where money is going, view profit/loss statements and see who your customers are.

You can link existing accounts such as banks, credit cards, Paypal, eBay, your own Web store or FreshBooks to Outright, and you can import your existing transaction history. From then on, Outright downloads your new data each day. Another useful feature: Outright organizes all of your data into IRS-approved tax categories, potentially lowering the workload and headache level at tax time.

Small business owners on the go will appreciate the Outright iPhone app; with the mobile app, you can stay on top of your business and enter travel expenses and mileage from the road.

Outright offers a free account, but small businesses are more likely to use the Plus version ($9.95 per month), which offers more features than the free version.

Xero: Share Your Business Numbers Online

With Xero online accounting, you can share access to the latest numbers and check cash flow in real-time. Once loaded, Xero offers a dashboard to quickly view your bank balances, invoices, bills and expense claims. There’s also an interactive graph to show money going in and out; you can also monitor specific data accounts from the dashboard.

One standout feature in Xero is the capability to collaborate online so small business employees can work as a team on financials. You can share your data and collaborate with your accountant and bookkeeper to get the advice you need. Xero lets you invite an unlimited number of people for free; you control what each person can see.

The invoicing system lets you customize invoices and connect with your customers through online invoicing. There are also options to create repeating invoices and schedule bill payments, and all payments, returns and credits are tracked automatically.

Pricing for Xero starts at $19 per month. Mobile apps for Apple, Android and Blackberry are available. Third-party add-ons can expand Xero functionality by incorporating CRM, inventory management, invoicing, job systems and other specialized business tasks.

The specific terms of SBA loans are negotiated between a borrower and an SBA-approved lender. In general, the following provisions apply to all SBA 7(a) loans.

Loan Amounts

7(a) loans have a maximum loan amount of $5 million. SBA does not set a minimum loan amount. The average 7(a) loan amount in fiscal year 2015 was $371,628.

Fees

Loans guaranteed by the SBA are assessed a guarantee fee. This fee is based on the loan’s maturity and the dollar amount guaranteed, not the total loan amount. The lender initially pays the guaranty fee and they have the option to pass that expense on to the borrower at closing. The funds to reimburse the lender can be included in the overall loan proceeds.

On loans under $150,000 made after October 1, 2013, the fees will be set at zero percent. On any loan greater than $150,000 with a maturity of one year or shorter, the fee is 0.25 percent of the guaranteed portion of the loan. On loans with maturities of more than one year, the normal fee is 3 percent of the SBA-guaranteed portion on loans of $150,000 to $700,000, and 3.5 percent on loans of more than $700,000. There is also an additional fee of 0.25 percent on any guaranteed portion of more than $1 million.

Interest Rates

The actual interest rate for a 7(a) loan guaranteed by the SBA is negotiated between the applicant and lender and subject to the SBA maximums. Both fixed and variable interest rate structures are available. The maximum rate is composed of two parts, a base rate and an allowable spread. There are three acceptable base rates (A prime rate published in a daily national newspaper*, London Interbank One Month Prime plus 3 percent and an SBA Peg Rate).

Lenders are allowed to add an additional spread to the base rate to arrive at the final rate. For loans with maturities of shorter than seven years, the maximum spread will be no more than 2.25 percent. For loans with maturities of seven years or more, the maximum spread will be 2.75 percent. The spread on loans of less than $50,000 and loans processed through Express procedures have higher maximums.

*All references to the prime rate refer to the base rate in effect on the first business day of the month the loan application is received by the SBA.

Percentage of Guarantee

SBA can guarantee as much as 85 percent on loans of up to $150,000 and 75 percent on loans of more than $150,000. SBA’s maximum exposure amount is $3,750,000. Thus, if a business receives an SBA-guaranteed loan for $5 million, the maximum guarantee to the lender will be $3,750,000 or 75%. SBA Express loans have a maximum guarantee set at 50 percent.

Welcome to Raleigh Business Connections

As a Raleigh business networking group, we are committed to helping you grow your business through effective referral marketing. This article provides some time-tested advice to having success as a member of a business networking group. Business networking is a joining together of business people, including sole-proprietors, sales people.

Raleigh Business Connections is a business networking group in Raleigh, North Carolina. It is a diverse, non-competing membership group with one member representing each career field. Download the Raleigh Business Connections Membership Agreement Form. Membership Guidelines If you primarily sell residential real-estate and we.

Mistakes Some Business Networkers Make: Some people think that business networking is simply a matter of showing up to meetings, handing out business cards and waiting for people to give them referrals. These people quickly become frustrated with the results of this strategy. It is important to us that you prosper as a member of our.

This is a list of various resources freely available to you to help you become a more effective business networker. If you know of any other quality resources or would like to contribute your own, please click the Contact Us button above or talk to one of us at our meeting on Wednesday. Business Networking A great resource for.

Networking Tips

Business is Like A Game

Play online

Virtonomics (since 2006) is a business strategy game based on real world economy, business, entrepreneurship and management principles. The purpose of the game is to create a profitable and competitive business. Each player receives a starting capital, which can be used to develop the virtual company according to their own unique scenario. Users customize their business goals, strategies and tactics.

Virtonomics is highly versatile – Players choose their own business goals, strategies and tactics. As in real life, individuals are able to venture into Retail, High Tech, Manufacturing, Agriculture, Medicine, etc. Every business can be highly profitable – all it takes is knowledge and determination to pursue one’s goals.

Gamification for business and education

The use of gamification to engage users in solving various problems has been utilized by businesses and various educational institutions globally. Various business simulations have been created to assist and assess employees and students. Major businesses and universities have already deployed or will soon be deploying gamified applications.

Virtonomics offers a unique edge – our virtual economy is managed by its users! All the actions and interactions in the game are made with and by real people. During the gameplay, players gain specific knowledge in: leadership, interpersonal communication, team work, global business development and operations.

Business simulation

A large and proactive user base of Virtnomics creates a highly realistic resemblance to the real world’s economy: free-markets, trade, production and partnership.

One of the most life-like experiences players find during the gameplay is that the game has no linear simulation scenario. There is no preset algorithm for winning or losing. Players have endless possibilities to reach their unique business goals.

18 API Business Models Deconstructed

Behind ecommerce s social and omnichannel evolution lie APIs, whether they be internal or 3rd party. Powering apps, widgets, sharing tools and content feeds, APIs enable systems to communicate with other systems, and empower you to expand your catalog and content experiences beyond a storefront.

For us non-techies, understanding the opportunity for using and monetizing APIs (application programming interfaces) can be best explained by real-world examples. Today s post is based on a section of slides from a presentation Open APIs: What s Hot, What s Not? by John Musser of ProgrammableWeb. We ve fleshed out the examples to provide context for each model.

Here s the org chart at a glance (keep reading to see enlarged sections):

And the breakdown:

Free

Facebook offers its API free to any developer. However, the model is freemium like Apple and Google, it takes a cut of in-app payments, e.g. the purchase of Farmville Coins. Facebook charges a 30% service fee, plus any applicable sales tax or VAT, on each Facebook Payments transaction.

Developer Pays

Amazon Web Services is a cloud computing product, its appeal is its efficiency pay only for what you need to use. It can scale up or down as needed.

Developers can use the email marketing tool s API to create a customized UI or reporting dashboard, for example. Pricing depends on the usage tier you fall in (how many database calls you make in a month).

Compete offers a free and paid all access version of its data, similar to free anti-virus software and a premium edition.

For ecommerce sites that want to use PayPal transaction processing without exposing customers to the PayPal interface, the Direct Payment API allows developers to design and host their own checkout pages while the payment processor works behind the scenes. PayPal makes money off the transaction fees.

Developer Gets Paid

There are a few affiliate models. Publishers who advertise Amazon products on their websites can earn commissions when referred visitors make a purchase. Shopping.com ads pay out per click.

Rdio is a recurring-revenue product, sharing the recurring spoils (subscription and mp3 downloads) with its affiliate partners through LinkShare. You can earn recurring revenue each month, for as long as a subscriber recruited by you remains an Rdio subscriber. You can also earn revenue each time someone purchases and downloads an MP3.

Jigsaw offers a unique way for developers to earn Jigsaw points by affirming or challenging the accuracy of Jigsaw data (helping Jigsaw improve its data quality).

Software vendors offer APIs for 3rd party developers to extend their platform. This helps the software vendor focus on the core product without complicating their road map with features not everyone needs. Extensions can be developed to enhance the product, make it more attractive to users who can add the apps they want, and save internal resources. Some software companies have a marketplace where apps can be discovered and downloaded.

Content publishers like the New York Times don t sell their API to syndication partners, but the API facilitates the syndication.

Internal use, consumer facing

Twitter s API is offered to 3rd party developers to improve the user experience with a broad range of Twitter experiences like Klout, Hootsuite, Clicktotweet and Twitalyzer. Netflix API enables it to be extended to mobile devices, increasing the attractiveness of the service.

Internal use, internal facing

Internal facing APIs are used on your back end to use your own data to build out your own features. Ecommerce APIs, for example, may be used to build a companion mobile app or connect social data to your ecommerce platform. NPR offers external API access to its radio programs that can be connected with its Transcript API, which it could also leverage internally, for example.

Why are APIs useful for ecommerce?

For more information on APIs for ecommerce, check out our previous posts: